DENVER (KDVR) — Kroger, the parent company of King Soopers, and Albertsons, the parent company of Safeway, announced a merger agreement on Friday morning.

The merger agreement was unanimously approved by the board of directors of each company, Kroger said.

Kroger bid $20 billion for Albertsons Companies Inc. Kroger said it will also assume $4.7 billion of Albertsons’ debt.

The merger is expected to close in early 2024, Kroger said. The merger will require regulatory clearance.

The merger, first reported by Bloomberg, will fuse the two of the largest grocery store chains in the country. Kroger is the second-largest grocer while Albertsons is the fourth.

Effect on Denver grocery shopping

Both companies have large shares of Colorado’s grocery store market. Albertsons has 105 grocery stores in Colorado, mostly under the Safeway brand, according to the company’s website. Kroger lists 148 stores in the state, operating as King Soopers and City Market stores.

The merger would create a single conglomerate in control of roughly half the Denver-area market. According to data from Chain Store Guides, reported by Axios, Kroger had 33.6% of the Denver area’s grocery sales in 2021, while Safeway had 11%. Combined, the single company would have nearly 45% market share in the Denver area.

This would dominate the other chains by a large margin. Walmart is the metro’s second-largest grocer with a 16.5% market share.

UFCW, a union representing grocery store workers at both companies, released a statement Thursday against the merger, saying it would be “devastating” for workers and customers. “This proposed merger of two of the largest grocery companies in the nation will no doubt create a monopoly in the grocery industry for many communities,” said Kim Cordova, president of UFCW Local 7 and vice president of UFCW International Union.

Grocers have reported record earnings in the last year as inflation pressures prompted shoppers to spend more of their budget making food at home rather than eating out.

Statement from Kroger

“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” said Rodney McMullen, Kroger Chairman and Chief Executive Officer, who will continue serving as Chairman and CEO of the combined company. “Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors. As a combined entity, we will be better positioned to advance Kroger’s successful go-to-market strategy by providing an incredible seamless shopping experience, expanding Our Brands portfolio, and delivering personalized value and savings. We’ll also be able to further enhance technology and innovation, promote healthier lifestyles, extend our health care and pharmacy network and grow our alternative profit businesses. We believe this transaction will lead to faster and more profitable growth and generate greater returns for our shareholders.”

What changes could happen?

Kroger said that it plans to invest in lowering prices for customers and expects to reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers.

Kroger also said that an incremental $1.3 billion will also be invested into Albertsons Cos. stores to enhance the customer experience.

The newly combined company also said it expects to invest $1 billion to continue raising associate wages and comprehensive benefits after close.

Statement from Colorado Attorney General Phil Weiser

“As Colorado’s attorney general, I take very seriously our department’s responsibility to review mergers that threaten Colorado consumers. At a time of rising food prices, the possibility of undue consolidation in the grocery business raises serious concerns particularly since King Soopers and Safeway have a large footprint in Colorado. My department and I will closely monitor and review this proposed merger between Kroger and Albertsons to ensure it does not harm consumers or workers.”